News Corp increases war chest to US$1bn

News Corporation (News Corp) has announced that it is upsizing its private offering to $US1 billion (A$1.307 billion) aggregate principal amount of Senior Notes.

News Corp said that it plans to use the net proceeds from the offering for “general corporate purposes, which may include acquisitions and working capital”.

The amount is an increase from the previously announced $US750 million (A$980 million), due in 2029, bearing an interest rate of 3.875% per annum. This will be payable semi-annually on 15 May and 15 November each year, commencing 15 November 2021. The notes will mature on 15 May 2029.

A Senior Note is a type of bond more secure than other bond types, typically paid back in a shorter time frame. These bonds must be repaid before other debts in the event of bankruptcy, giving them a higher degree of safety for investors, earning a slightly lower rate of interest.

The sale of the Notes is expected to close on the 15 April 2021, subject to customary closing conditions.

The announcement comes after News Corp reported that its final quarter in 2020, was the company’s  strongest since 2013, when the new News Corp was established.

Prior to the funding announcement, News Corp entered into an agreement to acquire the Books & Media segment of Houghton Mifflin Harcourt (HMH Books & Media), for $349 million in cash. The business will be operated by News Corp subsidiary, Harper Collins Publishers.

 In calendar year 2020, HMH Books & Media had strong growth with net sales of US$191.7 million. Harper Collins expects to realise immediate cost savings, accumulating to more than US$20 million annually within two years, including manufacturing, distribution and other cost efficiencies.  The acquisition is expected to close in the fourth quarter of fiscal 2021.


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